Indonesia, supplying more than a fifth of global exports, surprised the mining world in January by putting into effect an outright ban on nickel ore exports.
Initially record warehouse inventories, massive stockpiling by Chinese pig iron producers and growing mine supply kept a lid on the price which was languishing at near five-year lows below $14,000 a tonne at the start of the year.
But the Asian nation, against expectations, stuck to its guns and the ban, in combination with fears that tensions with Russia could affect supply from top miner Norilsk, sent the price of the steelmaking ingredient above $20,000 in May.
The price subsequently pulled back from those levels, but last week saw nickel take another stab at $20,000 a tonne after the Philippines – the only other source in the region of high-grade laterite ore required by China and responsible for 9% of global mine supply – hinted that it may follow Indonesia's playbook.
Even before suggestions of an ore export ban Philippine supply has been sketchy
Nickel was last trading at $18,750 and is up 35% in 2014, but expectations are for the price to appreciate sharply this year and next.
Capital Economics, a research house,
says Chinese pig iron makers are likely to have run down their stocks by the first half of next year.
Even before suggestions of an ore export ban Philippine supply has been sketchy. Already Japanese refiners and steelmakers are struggling to buy ore and once China re-enters the market regional supply will be highly constrained.
Capital Economics argues that the rise in LME stocks of refined nickel at more than 330,000 tonnes is less an indication that supply is ample, but that metal from China and Australia, previously held off market are being moved into visible locations.
Another factor that should keep prices on the ball is the slow progress with the construction of smelters (some 16 have been proposed) in Indonesia, ostensibly the reason for the ban in the first place.
Capital Economics forecasts nickel to reach $21,000 next year, but others are much more bullish.
Citibank sees $24,000 next year and a peak of $30,000 while
Scotiabank predicts $23,700 in 2015 and highs of $26,500 the year after that.
It's not only 2014 that's been a nickel rollercoaster.
The metal, named after a mischievous German mythological creature (and Old Nick in the Christian tradition), takes the prize for the most volatile of all commodities over the past decade:
